How to bill VAT correctly? The complete guide for self-employed entrepreneurs

When you set up a micro-business, the administrative side of things can be daunting, with so many declarations to be made.

Once all the paperwork is in order, you start your business and your first customer calls on your services. And then the drama begins. You need to draw up an invoice, but you have no idea what to do. How do you draw up an invoice as an auto-entrepreneur? What information is required? What is the applicable VAT rate? Are auto-entrepreneurs exempt ? How do you calculate VAT?

If these words sound frightening, we're a long way from a journey worthy of Asterix and Obelix's A-38 pass.

With our comprehensive guide, co-written with Charlène Serayet, managing director of Dasmind and an expert in administrative management, you'll never wonder again how to charge VAT as a micro-entrepreneur.

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What is VAT?

Definition of VAT

VAT, or Value Added Tax, is an indirect tax that we all pay on the purchase of goods or services, included in the final selling price. That's why all invoices and till receipts are marked with these two words:

• HT, or excluding taxes, which corresponds to the seller's remuneration;
• TTC, or Toutes Taxes Comprises, which corresponds to the price before tax plus the amount of VAT.

For example, when you buy bread from your favorite baker, you also pay VAT. Your baker must then, in turn, pay the VAT he has collected. 🥖

Well, as an auto-entrepreneur, you have to do the same!

The different VAT rates applicable

In France, there are different VAT rates applicable. Obviously, the amount of VAT is not up to the merchant; each rate is defined by the service you offer as an auto entrepreneur.

• The standard rate is 20%, applicable to most sales of goods and services. If there is no specific rate for your activity, then this is automatically the one applied.
  
  
• The reduced rate of 10% applies to certain activities frequently offered by auto-entrepreneurs:
  • hairdressing and beauty services,
  • operations relating to intellectual works, such as literary translation,
  • certain artistic activities,
  • food sales and catering,
  • passenger transport,
  • accommodation services,
  • removal services,
  • home improvement and garden maintenance,
  • photography,
  • translation services,
  • in-home childcare,
  • sale of agricultural products processed by the farmer...
    
    
• The reduced rate of 5.5% also applies in very specific contexts:
  • takeaway catering,
  • equipment and services for the disabled,
  • book sales,
  • work to improve the energy quality of housing,
  • services linked to access to cultural activities, such as museums or historical monuments,
  • equestrian activities.
    
    
• The special 2.1% rate applies to a small number of services:
  • the sale of live butchery and charcuterie animals to non-taxable persons,
  • certain shows (theaters, concerts),
  • press publications registered with the Commission paritaire des publications et agences de presse.
    
    
• A different VAT rate applies to the French overseas departments. In this case, the standard rate is reduced from 20% to 8.5%.

These are just examples, and the actual amount obviously depends on your business and the service you offer.

Even if the most common rate is 20%, don't hesitate to check the actual percentage to avoid making a mistake. The French Ministry of the Economy and Finance website provides a detailed list of applicable rates.

An accounting obligation for auto-entrepreneurs?

As an auto-entrepreneur, you have certain accounting obligations. Whether or not you are subject to VAT, you must keep strict accounts.

By reading your accounts, it should be possible to identify the amount of all transactions received, and the details of these (for example, method of payment, origin of receipts, dates, details of service, references of products bought and sold...).

In the case of auto-entrepreneurs liable for VAT, this must also be indicated.

💡 There is no legal obligation as to the method used to do your accounting.

When should VAT be invoiced as an auto-entrepreneur?

The different ceilings

We've seen that there are different VAT rates, and as if that wasn't enough, there are also different ceilings for auto-entrepreneurs.

They are set for a three-year period, meaning that those currently in place are valid for the years 2023, 2024 and 2025.

💡 For your first year as an auto-entrepreneur, your CA threshold is adjusted according to your operating time. This is known as prorata temporis.

Let's take a closer look at the ceilings:

Commercial or accommodation activities

To benefit from the basic VAT regime for auto-entrepreneurs, you need to be in one of the following situations:

• For year N-2, the ceiling to benefit from the basic VAT threshold is €91,900.
• For year N-1, the ceiling remains unchanged at €91,900. If the ceiling for year N-2 is respected, you benefit from a tolerance threshold of €101,000.
• For the current year N, you must keep your sales below the tolerance threshold to continue to benefit from the basic VAT exemption the following year.

👉 For example, if your sales are €85,000 for the year 2022, you are exempt for the following year. In 2023, if your sales total €95,000, you have exceeded the ceiling, but remain below the tolerance threshold. You are therefore still exempt from basic VAT for 2024.

Services or self-employed activities

As in the previous case, you must be in one of the following situations:

• For year N-2, the ceiling for benefiting from the basic VAT regime is €36,800.
• For year N-1, the ceiling remains the same. In addition, if your sales do not exceed this ceiling for year N-2, you benefit from the tolerance threshold of €39,100.
• For the current year N, you must keep your sales below the tolerance threshold to continue to benefit from the basic VAT exemption the following year.

👉 For example, if your sales are €35,000 for the year 2023, you are exempt for the year 2024. However, if you generate sales of €102,000 in that year, you will no longer be eligible for the basic VAT scheme in 2025.

Lawyers and authors of intellectual works

To remain eligible for the basic VAT exemption, you must be in one of the following situations:

• For year N-1, your sales must not exceed €47,700.
• For the current year N, your sales must not exceed €58,600.

👉 For example, if your sales are €37,760 for the year 2023, you will still benefit from the basic TA regime in 2024.

Unregulated activities

As in our previous case, there are only two possibilities here:

• For year N-1, sales must be less than €19,600.
• For the current year N, sales must not exceed €23,700.

👉 For example, if your sales are €24,673 in 2023, you are not exempt in 2024.

Exemption with the basic VAT exemption

The basic VAT exemption is the first system for micro-enterprises. It automatically exempts auto-entrepreneurs from declaring and paying VAT. This means you can issue your invoices tax-free.

Not all auto-entrepreneurs can benefit from this system. The only condition is that your annual sales (CA) do not exceed the basic threshold. Ceilings are set according to the type of activity.

However, there is a tolerance threshold (except for the first year of business) which allows you to continue to benefit from this scheme even if you exceed the ceilings. Please note, however, that the tolerance threshold is only valid for 2 consecutive years.

💡To find out if you are exempt, you need to take the previous year's sales. For example, for the year 2024, the sales figure for 2023 is taken into account.

What happens if you exceed the threshold?

In all cases, you must pay VAT from the first day of the month in which the threshold is exceeded. In this case, you need to notify your local business tax office (SIE).

👉 For example, if you exceed the VAT threshold on December 13, you must invoice VAT for the whole month of December. You must then modify the invoices already issued and add the necessary mentions (we'll come to that).

💡VAT can be deducted from your business purchases, known as VAT recovery. You need to apply for this to the tax authorities when you file your VAT return for the first month you exceed the limit.

Then you need to choose a new regime for your auto-entreprise. 👇

Simplified scheme

Under the simplified regime, your micro-enterprise is taxed on the basis of your profits.

You automatically benefit from this system as soon as you exceed the basic VAT exemption thresholds.

✅ Under the simplified scheme, you only have to declare VAT once a year, which eases your reporting and payment obligations. However, you must pay two instalments during the year, in July (55%) and December (40%), based on the previous year's sales.

For auto-entrepreneurs, this system is the most advantageous, as it allows you to keep simplified accounts.

The "régime réel normal

The normal VAT system is much more restrictive, especially for auto-entrepreneurs, and requires much more precise accounting.

You benefit from this system as soon as you exceed the limits of the simplified system.

✅ You must declare your VAT every month, according to the date predefined for your company. However, if the annual amount due is less than €4,000, you can opt for quarterly declaration and payment.

Note that you can opt for this system even if you are eligible for the basic exemption or simplified system.

A word from the expert

The transition to the actual VAT system can also represent an opportunity for professionalization. Over and above the administrative burden, this approach enables VAT to be reclaimed on purchases and investments, thereby reducing costs.

A practical tip for entrepreneurs is to invest in software that simplifies the monitoring of thresholds and automatically generates VAT returns. This not only ensures compliance with regulations, but also enables better cash flow management and anticipation of expenses.

Good to know: the VAT rate to be invoiced varies not only according to your services, but also according to the location of your customer. If you're based in France, but you're invoicing a company in La Réunion, the VAT rate will be either 8.5% or 2.1%, depending on your service.

Charlène Serayet,

How do you charge VAT when you're an auto-entrepreneur?

Calculating the VAT amount

Now that you know which rate applies to your activity, all that's left to do is calculate the amount of VAT.

If you've understood correctly, charging VAT will have an impact on your prices, since it's your customers who pay. Your prices will therefore undeniably rise.

The method of calculation isn't very difficult: excl. tax × VAT rate.

A quick example?

You're a photographer with a 10% VAT rate, and you need to calculate the VAT for a service invoiced at €100. Your VAT is therefore €10 (100 × 10 / 100 - 100 × 0.1).

Information required on your invoices

For auto-entrepreneurs not liable for VAT, you simply need to indicate the following: "TVA non applicable article 293B du Code général des impôts".

For auto-entrepreneurs liable for VAT, you must indicate a certain amount of information:

• unit prices excl,
• total H,
• the applicable VAT rate,
• amount incl. VAT,
• VAT number (for amounts over €150 excl. VAT).

Avoid errors with software

Even with the best will in the world, mistakes can happen. But for such a precise procedure, it's best not to make any mistakes to avoid any problems.

👉 In the event of errors or oversights, you'll have to pay a 10% surcharge if you don't spontaneously regularize your situation within two months.

Accounting software is particularly efficient, since it makes no mistakes. They provide the best possible support for all your accounting, including VAT.

Abby is a solution for self-employed entrepreneurs looking for a simple , comprehensive software package to manage all their activities:

• invoicing,
• declaration of social security contributions,
• bookkeeping.

In addition to helping you draw up your invoices, the application automatically calculates the amount of VAT collected based on your receipts. All you have to do is enter them on your return! It saves you time and energy.

Steps for declaring and paying VAT as a self-employed entrepreneur

Now that you've got everything you need to do things by the book, it's time to declare your VAT.

All auto-entrepreneurs subject to VAT are required to declare it, so if you're covered by the basic VAT exemption scheme, you're off the hook!

For the rest of you, don't worry, you've done the hard part.

Let's take a step-by-step look at how to proceed.

#1. Check if I'm liable for VAT

First of all, take the time to check whether you are liable for VAT. We indicated the various ceilings not to be exceeded earlier.

• For your first year of business, calculate your sales on a pro rata basis according to your start-up date. This will determine your system for the following year.
• For subsequent years, you need to look at your sales for year N-1.

Refer to the ceilings. ☝️

#2. Create a professional account

The entire process is carried out on the tax site. You need to create a professional account and follow the steps indicated.

#3. Get my VAT number

Every entity liable for VAT must have an individual tax identification number, known as an intracommunity number.

To obtain one, you need to apply to your local business tax office.

💡This number is mandatory, and you must indicate it on your invoices.

#4. Choose a tax regime

When you apply for your VAT number, you must also choose the desired taxation regime, either the simplified regime or the normal regime.

If you've followed this correctly, it's the regime that determines how you declare and pay VAT. The rate is the same, regardless of your tax regime.

On the other hand, if you don't take any steps, you're automatically assigned to the simplified system, provided you're eligible.

See all software Billing and Invoicing

VAT invoicing as an auto-entrepreneur, in brief

VAT is one of the obligations you have to take care of as an auto-entrepreneur.

Whatever your business and the services you offer, you'll need to keep up to date with all the relevant details: sales, tax rate, tax regime... You'll no longer need to worry about these things, so you can get on with your business with complete peace of mind.